MGT 300

IT IN BUSINESS

Enabling the Organization Decision Making

PN. INTAN LIANA SUHAIME

 LEARNING OUTCOMES
9.1 Define the systems organizations use to make
decisions and gain competitive advantages

9.2 Describe the three quantitative models typically

used by decision support systems

9.3 Describe the relationship between digital

dashboards and executive information systems
 LEARNING OUTCOMES

9.4 List and describe four types of artificial intelligence systems

9.5 Describe three types of data-mining analysis capabilities

 DECISION MAKING
Reasons for the growth of decision-making information systems
People need to analyze large amounts of information
People must make decisions quickly
People must apply sophisticated analysis techniques, such as modeling and
forecasting, to make good decisions
People must protect the corporate asset of organizational information
 DECISION MAKING
Model a simplified representation or abstraction of reality
IT systems in an enterprise
 TRANSACTION PROCESSING
SYSTEMS
Moving up through the organizational pyramid users move
from requiring transactional information to analytical
information
 TRANSACTION PROCESSING
SYSTEMS
Transaction processing system - the basic business
system that serves the operational level (analysts) in
an organization

Online transaction processing (OLTP) the

capturing of transaction and event information using
technology to (1) process the information according
to defined business rules, (2) store the information,
(3) update existing information to reflect the new
information

Online analytical processing (OLAP) the

manipulation of information to create business
intelligence in support of strategic decision making
DECISION SUPPORT SYSTEMS

Models information to support

managers and business
professionals during the decision-
making process
 DECISION SUPPORT SYSTEMS
Three quantitative models used by DSSs include:

1. Sensitivity analysis the study of the impact that

changes in one (or more) parts of the model have on
other parts of the model. Eg: What will happen to the
supply chain if a tsunami in Sabah reduces holding
inventory from 30% to 10%?
2. What-if analysis checks the impact of a change in an
assumption on the proposed solution. Eg: Repeatedly
changing revenue in small increments to determine it
effects on other variables.
3. Goal-seeking analysis finds the inputs necessary to
achieve a goal such as a desired level of output. Eg:
Determine how many customers must purchase a new
product to increase gross profits to $5 million.
EXECUTIVE INFORMATION
SYSTEMS

A specialized DSS that

supports senior level
executives within the
organization
 EXECUTIVE INFORMATION SYSTEMS
Most EISs offering the following capabilities:
Consolidation involves the aggregation of
information and features simple roll-ups to
complex groupings of interrelated information.
Eg: Data for different sales representatives can be
rolled up to an office level. Then state level, then a
regional sales level.
Drill-down enables users to get details, and
details of details, of information. Eg: From regional
sales data then drill down to each sales
representatives at each office.
Slice-and-dice looks at information from
different perspectives. Eg: One slice of
information could display all product sales during
a given promotion, another slice could display a
single products sales for all promotions.
 EXECUTIVE INFORMATION
SYSTEMS
Digital dashboard integrates information from multiple
components and presents it in a unified display
 ARTIFICIAL INTELLIGENCE (AI)
Intelligent system various commercial applications of
artificial intelligence

Artificial intelligence (AI) simulates human intelligence such

as the ability to reason and learn
Advantages: can check info on competitor
 ARTIFICIAL INTELLIGENCE (AI)
The ultimate goal of AI is the ability to build a system that can
mimic human intelligence
 ARTIFICIAL INTELLIGENCE (AI)

Four most common categories of AI include:

* Expert system computerized advisory programs that imitate the

reasoning processes of experts in solving difficult problems. Eg: Playing
Chess.
* Neural Network attempts to emulate the way the human brain
works. Eg: Finance industry uses neural network to review loan
applications and create patterns or profiles of applications that
fall into two categories approved or denied.
Fuzzy logic a mathematical method of handling imprecise or
subjective information. Eg: Washing machines that determine by
themselves how much water to use or how long to wash.
 ARTIFICIAL INTELLIGENCE (AI)

Genetic algorithm an artificial intelligent system that mimics

the evolutionary, survival-of-the-fittest process to generate
increasingly better solutions to a problem.

Eg: Business executives use genetic algorithm to help them

decide which combination of projects a firm should invest.
* Intelligent agent special-purposed knowledge-based information
system that accomplishes specific tasks on behalf of its users
Multi-agent systems
Agent-based modeling

Eg: Shopping bot: Software that will search several retailers websites and
provide a comparison of each retailerss offering including prive and
availability.
 DATA MINING
Data-mining software includes many forms of AI such as neural
networks and expert systems
 DATA MINING

Common forms of data-mining analysis capabilities

include:
Cluster analysis
Association detection
Statistical analysis
 CLUSTER ANALYSIS

Cluster analysis a technique used to

divide an information set into mutually
exclusive groups such that the members of
each group are as close together as
possible to one another and the different
groups are as far apart as possible
CRM systems depend on cluster analysis to
segment customer information and identify
behavioral traits
Eg: Consumer goods by content, brand loyalty or similarity
 ASSOCIATION DETECTION

Association detection reveals the degree to which variables

are related and the nature and frequency of these relationships in
the information
Market basket analysis analyzes such items as Web sites and
checkout scanner information to detect customers buying behavior
and predict future behavior by identifying affinities among
customers choices of products and services
Eg: Maytag uses association detection to ensure that each generation of
appliances is better than the previous generation.
 STATISTICAL ANALYSIS
Statistical analysis performs such functions as information
correlations, distributions, calculations, and variance analysis
Forecast predictions made on the basis of time-series information
Time-series information time-stamped information collected at a
particular frequency
Eg: Kraft uses statistical analysis to assure consistent flavor, color, aroma,
texture, and appearance for all of its lines of foods
THANK YOU